Nigeria’s economy formally entered into recession in the second quarter of 2016, beginning from the month of May. It marked a time when the general decline in economic activities characterized majorly by fall in Gross Domestic Product (GDP) for two quarters consecutively, was officially recognized. In this report, SULAIMON OLANREWAJU, SANYA ADEJOKUN and CHIMA NWOKOJI examine practical tips offered by experts on how individuals, businesses and the government can survive the situation in 2017.
What we are focing is stagflation —CBN
After the Federal Government declared that Nigeria is officially in recession, the Central Bank of Nigeria through its governor, Mr. Godwin Emefiele stretched it further by explaining that, “in reality, Nigeria’s economy is currently facing a classic case of ‘stagflation’; a situation which occurs when a country’s Gross Domestic Product (GDP) is falling or stagnant, while unemployment and inflation are rising, all at the same time.”
But while the citizens are being treated with various definitions, and government works to reposition the economy, a number of concerned experts and stakeholders are not silent about proffering solutions and giving tips on how individuals, companies and government itself can survive the present economic situation.
People should spend less than they earn —Peterside
The first thing to bear in mind is that cash is going to be King and whoever has it or has access to it should preserve it going into 2017. This was the view of Atedo Peterside, founder and chairman of Stanbic IBTC Bank Plc at a recent economic outlook session with top economists and top Chief Executive Officers (CEOs). The session looked at Nigeria’s economic direction for 2017.
They advised people to spend less than they earn; SAVE for the rainy day; cut down on avoidable merriment; look for dollar or pounds-earning businesses “if you can.”
During a recession, jobs are hardly secure; yet, should job loss happen, it could be hard to get a new one. Therefore, other experts recommend that individuals should enhance their skills and even on the job, they should work extra hours and a little harder. When layoffs happen, experts recommend that one should update his or her CV, and be on the lookout for possible job openings, if not cut-out for entreprenuership.
Most people don’t have emergency funds anywhere. “But if you are still lucky to be employed, start one today by setting aside certain sum of money every month. Decide how much money you want to add to it every month. Keep the money in a savings account and let it stay there.
Learn to live on your income —Nnanyerugo
“If you are gainfully employed, you must learn to live on your income and avoid going into debts as much as possible, especially during a recession such as this. If you are in debt, focus on paying off your debts as soon as you can, as this will also help in lowering your spending and enable you to have more money to save,” a former banker and Economist, Mr. Damian Nnanyerugo told Saturday Tribune in a telephone chat.
According to the banker, if there are opportunities to make extra cash, once it is legitimate; individuals should go ahead and do it. “Can you baby-sit? Do you know how to make hair or apply make-up, events decoration; Do you know how to bake, knit, or do repair works? Cash in on it and earn some extra naira by so doing.
“And for Small business owners, they should separate the macro-economy from the micro-economy, to avoid macro-managing when they should micro-manage and vice versa. Looking inward at your operations and customers, engaging in real, candid discussions with customers, prospects and even competitors is important to monitor the unique circumstances affecting their businesses and the local market.
“Having your ear to the ground to understand what’s going on in your market is critical. Customers will tell you if they’re considering pulling back or shifting the money they do have to invest. When you hear that feedback, you can adapt accordingly,” he advised.
Cut down on household expenses —Opinion poll
Similarly, in a new public opinion poll released recently, NOIPolls Limited, Nigeria’s leading opinion polls company suggested some coping strategies and measures already adopted by Nigerians in late 2016 to manage the impact of the current economic realities.
Some of such strategies include: Cutting down on household expenses and luxury items; enduring the situation & seeking the face of God in prayers; adjusting family feeding patterns; creating alternative sources of income and engaging in subsistence agriculture. Others include: reduction in the quality of meals, withdrawal of children from expensive schools, trekking long distances to work and businesses, reduction in regular travels, patronizing second hand clothing, embracing subsistence farming and reduction in entertainment expenses as well as adopting emergency taxi driving for the meantime, for car owners.
According to the report, “Interesting, 37 percent of the respondents revealed that they have ‘Cut down on household expenses & luxury items’; while 16 percent say they are ‘just enduring the situation and seeking the face of God in pray’. Also, 10 percent say they have had to ‘adjust their family feeding patterns’ suggesting a reduction in the quality and quantity of food they now consume. Other coping strategies mentioned include: ‘Creating alternative source of income’ (6 percent), ‘purchase of locally manufactured goods’ (6 percent) and ‘Engaging in subsistence agriculture’ amongst others. Amazingly, 14 percent of Nigerians ‘have not fashioned any strategy’ or measure to cope with these socio-economic events.”
The opinion poll was conducted in the week commencing July 25th 2016. It involved telephone interviews of a random nationwide sample. 1,000 randomly selected phone-owning Nigerians aged 18 years and above, representing the six geopolitical zones in the country, were interviewed.
While a herd of finance experts are concerned with survival of individual households and businesses as enumerated above, Mr. Godwin Emefiele CBN Governor, Mr. Bismarck Rewane, renowned economist and Chief Executive Officer, Financial Derivatives Company Limited want the government to urgently review its policies and spend more on infrastructure to attract both local and foreign investment in the economy.
For Emefiele, investing in basic infrastructure including roads, bridges, airports, railways, and information technology is not only good in terms of immediate job creation; it acts as a catalyst to the movement of goods and services across the country.
At the bankers’ dinner held in Lagos, the CBN governor said, “We need to explore opportunities for Public Private Partnerships for similar opportunities in infrastructure projects that could offer lucrative returns to investors and help drive economic growth across the country.
“Whatever we do to jumpstart growth in Nigeria, we just cannot afford to ignore Agriculture at all. Agriculture remains the largest employer of labour in Nigeria and contributes about 24.2 percent of our GDP.”
We should increase local production to 70 percent —Ajakaye
Professor Olu Ajakaiye, in an earlier chat with Saturday Tribune said that “In the medium term, Nigerian leadership and our investment partners should work together to increase local production to about 70 percent from the domestic sources. As such, the influence of depreciation in exchange rate price would not be too high, so that we could see reduction in pump prices of petroleum products.”
The professor of economics added that in the medium term, pump prices may come down to give some respite if 70 percent local production is achieved.
He further said that if Nigeria’s major customers like China and India could register more growth rate, it would have some economic benefits for the country as well. At this point, it is imperative to make the Niger Delta region stable, in order to make the operating environment conducive for crude oil production he advised.
Ajakaiye who is also the President, Nigeria Economic Society (NES) said : “On the area of petroleum products, we have to live with the challenge of high petrol price because the large quantity of the product is imported and landing cost of petrol is quite high. So, it is hard to expect reduction in price because the exchange rate is moving in the wrong direction now”.
Also, in a letter to president Muhammadu Buhari, titled: “Practical solutions to scale Nigeria’s recession,” and made available to Saturday Tribune, Mr. Olisa Agbakoba a legal luminary stated:“ I recommend that money from the Treasury Single Account should go back to the banks at single digit rates and that banks’ recommended lending rate should not exceed 5 per cent.”
Govt should inject funds into the economy —NISER boss
According to Professor John Adeoti of the Nigerian Institute of Social and Economic Research (NISER) the best approach the government should adopt to end the recession is to inject funds into the economy.
Professor Adeoti noted that the government was already poised to do that with the 2017 budget. He said, “With the size of the budget, it is clear that the government plans to inject funds into the economy.”
On borrowing by the government to fund the budget, Adeoti said, “Borrowing is necessary to finance the expansionary budget. What the government plans to do with this budget is to stimulate growth in the economy. That is quite commendable. Borrowing is not bad if it is used for the right thing. Borrowing to finance infrastructure is good. If we borrow now and invest in infrastructure, by the time oil rebounds, we will pay back conveniently. If we don’t do this expansionary expenditure, the economy will not get out of recession. If we don’t do this it will be tough for the country. We are fortunate that the people in charge now will use the money well to stimulate economic growth and not divert into other things.”
He also called on the government not to relent in its war against corruption. He said that every avenue for wastage should be blocked.
Govt should increase manufacturing capacity —Nweze
In his reaction, a faculty member of the Lagos Business School, Dr Austin Nweze, said the government should increase manufacturing capacity in the country as a way or energizing the economy.
He said, “Until we take manufacturing seriously and accord it its rightful position, we may not see the end of recession.”
According to him, recession signifies a slowdown in economic activities. So, increasing economic activities by giving production and manufacturing a boost will result in the recession paling out.
“So, what the government should do is to remove every hindrance to manufacturing. The greatest hindrance is poor electricity. The government should find an end to this. It is not as difficult as some people make it appear. If we will only do what is right, we shall get electricity supply right.
“Then the other hindrance is the forex issue. Our country is import-dependent. Even those items that are produced locally depend on foreign raw materials. So, for as long as we have issues with sourcing forex, we shall have issues with recession. The government should demonstrate enough will power to tackle those manipulating the process. Having three or four different exchange rate can never be in the interest of the country,” Nweze said.
Nigerians must think out of the box —Okiti, CEO, Times Economics Consulting
Dr. Okiti said that the Nigerian government must increase its level of budget implantation as a way to ensure that key or prior economic targets are fully achieved within a given period of time. He faulted the 2016 budget implementation, stating that the 2016 budget did not in way affect the life of the ordinary Nigerian positively.
“with the poor implementation of the budget over the years, it is impossible to even project what effect any money allocated by the government in a particular area of economy will do to cushion the level of hardship in the country”
He said that the government must stop deceiving themselves with rush economic programmes that do not have the capacity to be sustained but rather focus on economic programmes that over time will become a bedrock that will create many industrialist, entrepreneurs, agriculturalist among others.
Okiti advised Nigerian to think out of the box in order to carve out the untapped treasures of the country rather than waiting for the government as doing so, will means waiting for the price of oil to go up.
He added that, Nigerians must also learn to ask their leaders critical questions about the direction of their policies and how these policies can be sustained as a means of holding political office holders accountable